copyright guy harley 2008 1 revision. copyright guy harley 2008 2 elements of misrepresentation ...

1Copyright Guy Harley 2008

Revision

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Elements of Misrepresentation

Statement of material fact Statement was false Statement was addressed to the

representee before or at the time that the contract was entered into

Statement induced the representee to enter into the contract

Statement caused loss

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Statement is a Fact

Statement of past or present fact Not

a mere puff A misstatement of the law Statement of future intention

Unless no real intention at time of representation

Usually, not an opinion

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Statement is a Fact

An opinion can be a fact where:

No genuine or actual belief in its truth No reasonable person could hold opinion The representor has special knowledge The existence of an opinion can be a fact

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Statement is a Fact

Silence will not normally suffice Except

Distortion of a positive representation (half truths)

Altered circumstances Where there is a fiduciary relationship Where contract is of the utmost good faith

(e.g. insurance)

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Categories of Misrepresentation

Fraudulent misrepresentation Negligent Misrepresentation Innocent Misrepresentation Misleading & Deceptive Conduct Term of Contract

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Negligent Misrepresentation

There was a misrepresentation Representor owed a duty of care to

representee Representor failed to exercise the required

standard of care Loss, which was a reasonably foreseeable

consequence of the misrepresentation, was caused by misrepresentation

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Discharge of Contract

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Discharge of Contract

A contract can be brought to an end by:

1. Performance

2. Agreement

3. Frustration

4. Breach

5. A Term of the Contract

6. Operation of Law

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Termination by Performance

Where the parties wholly or substantially perform their obligations under the contract, the contract is discharged

Hoenig v Isaacs

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Entire Contract

If contract requires entire performance then obligations must be strictly completed

Entire performance required where anything less than full performance would significantly devalue the worth of the contract to the other party

Cutter v Powell

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Entire Contract

Exceptions Substantial performance Partial performance Divisible contracts Tender of performance Prevention of performance

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Substantial Performance

Contract discharged by completion of main part of contract

Performing party paid full price less value of shortfall

Hoenig v Isaacs Bolton v Mahadeva

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Partial Performance

Innocent party accepts incomplete work Quantum meruit paid to performing party for

reasonable cost of completed work Acceptance must be a genuine choice Sumpter v Hedges

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Divisible Contracts

Contract split into divisible parts for purposes of payment

Performance of each part requires party to pay for that part

Treated as several separate contracts

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Tender of Performance

• If preforming party offers to complete contract and offer refused then performing party is discharged

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Prevention of Performance

Where performing party is prevented from completing his obligations by the other party

Performing party is discharged from contract Performing party can sue for

breach of contract Quantum meruit

De Barnaby v Harding

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Discharge by Agreement

Parties to the contract agree to discharge their obligations to one another

This latter agreement will only be binding if: It is a valid contract; or Promissory estoppel arises

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Discharge by Agreement

The contract to discharge is subject to usual contractual rules e.g. economic duress

Bilateral dischargeMutual release of obligations under original contract can be sufficient consideration

Accord & SatisfactionWhere one party has performed contract, the non-performing party must provide fresh consideration

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Termination by Frustration

Where: An intervening event; Not contemplated by the parties; Makes performance

impossible; or Radically different to that originally

contemplated

the contract is automatically terminated

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Termination by Frustration - Examples

Destruction of Subject Matter Taylor v Caldwell

Personal Service Condor v The Barron Knights Ltd

Non-occurrence of an Event Krell v Henry Event must be central not merely a motivation Herne Bay Steamboat Co v Hutton

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Termination by Frustration - Examples

Supervening Illegality Performance becomes illegal due to change

in law Denny, Mott & Dickson Ltd v Fraser & Co Ltd

Not just because performance becomes difficult or expensive Tsakiroglou & Co Ltd v Noblee Thorl

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Termination by Frustration (Cont.)

Frustration does not apply where: The event was caused by the party seeking to

rely on the frustration Maritime National Fish Ltd v Ocean Trawlers

Ltd Contract makes specific provision for the event

Clark v Lindsay The party seeking to rely on frustration foresaw

the event

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Effect of Frustration

Contract is void from date of frustration (not ab initio)

Parties released from all further obligations All contractual obligations owed before date of

frustration must be performed Chandler v Webster

Prepayments can be recovered where a compete failure of consideration Fibrosa SA v Fairbairn Lawson Combe Barbour Ltd

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Frustrated Contracts Act 1988

Changes common law position Court may order

a refund of monies paid under a frustrated contract

Compensation for any performance that occurred prior to frustration

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Discharge by Breach

Cannot terminate for any breach no matter how slight

Can only terminate for breach of a condition Other terms are called “warranties” Breach of conditions allows the innocent party to

terminate the agreement and sue for damages Breach of a warranty only entitles the innocent

party to seek damages

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Discharge by Breach

Types of Breach Failure to perform contract Anticipatory breach

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Anticipatory Breach

Before time for performance, one party indicates intention not to perform contract Anticipatory breach Hochster v De La Tour

Contract not automatically discharged Innocent party may:

Treat contract as repudiated and claim damages, or

Perform the contract and claim contract price Avery v Bowden

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Termination by a Term of the Contract

Parties may have agreed that the contract would be terminated upon the happening or non-happening of a certain event

The term may be automatic or merely provide an option to terminate

Term may give only one party the option to terminate

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Procedure for Termination Terminating party must not affirm contract Once terminated, terminating party cannot

change mind Termination means that the parties are

relieved from all future obligations. Termination does not affect rights and

obligations that have already accrued If not terminated, other party must continue to

be able to perform contract

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Restraint of Trade

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Illegal Contracts

A contract must be legal Consideration must not be

illegal or contrary to public policy

Otherwise contract is void

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Public Policy

Injurious to public life Contrary to the nations foreign affairs (trading

with the enemy) Interference with administration of Justice “injurious to the public good” but not serious

enough to be illegal Immoral contracts Prejudicial to family life Restraint of trade

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Restraint of Trade

One party agrees to restrict their right to carry on a trade or business

Examples Employee agrees not to work for employers

competitor after end of employment Vendor of business agrees not to open similar

business Business agrees to take supplies exclusively

from one supplier

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Restraint of Trade

Restraint of Trade clauses are void because Prevents person from earning a living Deprives public of persons expertise All citizens should be free to ply their trade

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Restraint of Trade

A restraint of trade clause is only enforceable to the extent that it is reasonable Nordenfelt v Maxim Nordenfelt

It will only be reasonable if it is In the public interest (having regard to protection of

competition), and no wider than is reasonably necessary to protect the

legitimate interests of the party relying on it ICT v Sea Containers Peters (WA) Ltd v Petersville Ltd

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Restraint of Trade

Factors to determine if restraint is reasonable The nature of the activities being restrained

Protection of trade secrets is validFoster v Suggett

Solely preventing competition is not validHerbert Morris v Saxelby

Time span Geographic extent

Papstravou v Gavan

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Trade Secrets

Is it in the public domain or secret? Does the employee have sufficient knowledge of

the trade secret to exploit it Did employee acquire this knowledge in the

course of his employment

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Restraint of Trade

Invalid part can be severed to allow valid part to remain

Can be enforced by injunction